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Higher Education and the Economy

Part of the debate – in the House of Lords at 2:50 pm on 19th April 2007.

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Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 2:50 pm, 19th April 2007

My Lords, one of the most striking manifestations of globalisation so far has been the emergence of a global market among higher education institutions. Of course, students and professors travelled outside their geographical or national boundaries from the Middle Ages onwards, but they did so in small numbers and those attending higher education institutions remained for many centuries a limited elite. In recent decades we have seen a massive worldwide expansion in the numbers of those benefiting from tertiary education and a smaller, but proportionately just as large, expansion in those continuing into postgraduate studies. This expansion in higher education has come when the ease and speed of travel have encouraged many to look abroad for their higher education, and when the spread of English as the world's main working language has put those with higher education institutions which teach in that language at a major comparative advantage. These developments are having a significant and potentially highly beneficial economic impact in this country so it is right that, thanks to the initiative of the noble Baroness, Lady Warwick of Undercliffe, we should be considering them.

In the eight years I spent, up to last summer, as part of the governance of one of Britain's large universities, I was struck by the fecklessness with which Governments of both main parties piled burdens on to the backs of the universities without providing them with the resources to carry those burdens. Year after year numbers increased and more efficiency savings were demanded, so investment was skimped, maintenance went by the board and quality was put at risk. Academic salaries lagged far behind those of other parts of the economy and even further behind those of some of our main overseas competitors. These trends could not have continued much longer without inflicting the serious damage that we have seen occur in a large number of continental European universities. Luckily, the lifting of the cap on tuition fees and an increase in government spending has provided a breathing space, but no more than that. It is time we looked ahead and considered how this vital sector of our future knowledge-based economy is to compete successfully in the global marketplace for higher education. Here are one or two suggestions.

First, we surely need to find some way to remove from the realm of party politics the provision of more financial resources for the higher education sector. At the previous general election, two of the three main parties campaigned on policies which would have inflicted serious damage on Britain's universities if they had ever been implemented. The hard fact is that the universities will not be able to look to the sort of increases in public spending they have received in the past few years, so the £3,000 ceiling will have to be looked at. Why not seek an impartial analysis of the options by an independent commission, thus removing the issue from becoming a political football at the next general election?

Secondly, we surely need to make further progress in encouraging philanthropic giving and business investment in the university sector. At the moment this remains pathetically small. Partly this is a task for universities, but the Government too should be looking at imaginative ways of making such giving and investment more tax effective. Further steps in matching financing will need to follow the first modest one just announced.

Thirdly, the whole issue of the international dimension of Britain's higher education needs more careful and systematic treatment than it has received hitherto. Universities need to be helped to devise and implement international strategies which maximise their chances of competing in the global marketplace. International students and researchers must be treated not just as cash cows to compensate for the shortfall in funding from domestic and EU students, but as an integral part of the university with their own specific needs and sensitivities. Government should be looking for ways of waiving visa fees and lightening entry procedures, not increasing them.

Fourthly, we should be giving a lead in Europe on this sector where we have real comparative advantages. We need to boost the research budget, and strengthen the activities of the European Research Council while avoiding costly white elephants like the proposed European Institute of Technology. We should be increasing academic and student exchanges.

This debate demonstrates beyond reasonable doubt the greatly enhanced place of higher education institutions in the economic life of this country. In purely material and utilitarian terms universities represent national assets which we need to develop and strengthen, but they are much more than that. They are centres of intellectual excellence and independent thought which are an essential part of our national life. The challenge for us is to maximise the beneficial economic impacts of the sector while not jeopardising the intangible intellectual values which the whole concept of higher education exists to propagate. That should not be beyond our reach.